FCC wins $33M contract over Waste Management in Rowlett, TX

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Dive Brief:

The City Council of Rowlett, TX unanimously voted to award a new waste and recycling collection contract to FCC Environmental Services on June 20, as reported by CBS11. The seven-year contract will begin in October and is worth an estimated $33 million.

According to the city, current hauler Waste Management submitted a renewal offer in October 2016 that would have resulted in a 84.4% cost increase. Rowlett then retained the consultant Burns & McDonnell, Inc. and issued a request for proposals. In May 2017, the city received eligible responses from FCC, Waste Management, Republic Services, Waste Connections and Community Waste Disposal.

While Waste Management wanted to change the current system of unlimited bulk waste pick-up, and wouldn't agree to provide new RFID-enabled collection carts, FCC agreed to those and all other terms in the city's RFP. The company will also be providing new rear-loader collection vehicles and plans to staff some trucks with two CDL-certified drivers to allow more flexibility on certain routes.

Dive Insight:

FCC is one of the largest waste and recycling service providers in the world, though this fact has occasionally been used against the company since its U.S. subsidiary set up shop in Texas in 2013. Concerns about perceived differences in European business models and a lack of domestic infrastructure were raised by competitors in 2015 during negotiations for a Florida contract that the company ultimately won. Those same sentiments were raised in a letter written by a local Waste Management director ahead of the Rowlett City Council's vote that was shared on a community Facebook group.

As quoted by CBS11, the letter called FCC "a European conglomerate that has virtually no collection experience or operations in the United States." It went on to say the city was at "serious risk of disruption in service" because of FCC's "lack of experience, infrastructure, equipment" and other factors. Waste Management spokesperson Greta Calvery confirmed to Waste Dive that this letter was previously sent to Rowlett city officials as an internal communication but not meant to be an official public statement. She provided the following response on the city's decision via email.

"Waste Management has enjoyed our partnership with the City of Rowlett serving the residents’ solid waste and recycling needs the past 4.5 years. We are disappointed in the City of Rowlett’s decision to change service providers, but we respect their decision. We are committed to working with the city to ensure a smooth transition."

During their June 20 meeting, Rowlett council members mentioned that they had been pleased with Waste Management's service since the company took over in 2012. Multiple references were made to bad experiences with their prior hauler — IESI, then a subsidiary of Progressive Waste Solutions — and concerns were raised about transitioning once again. The European factor also made it onto the official record, with one council member asking how many of FCC Environmental Services' employees were from the U.S. Tony Emilio, the company's municipal services director, estimated that number to be 98%.

Rowlett, a Dallas suburb of approximately 62,000 people, will mark FCC's first collection contract in Texas. The company recently opened a new material recovery facility in Dallas and has been contracted to process recyclables from three other municipalities in the state, with capacity for much more. In recent years, FCC has also landed a biosolids contract in Houston and two collection contracts in Florida. CEO Inigo Sanz has previously said he sees potential to grow in states throughout the Sun Belt and told Waste Dive in May that understanding the needs of a local market is key to successful expansion.

“We are very excited to partner with the city of Rowlett, its citizens can rest assured that FCC will provide exceptional services, we will bring the experience and latest technology that we use across the world," Sanz said of this latest deal, via email.

As a new company in the U.S. market, FCC could still face more questions about its background in other cities, but the continued accumulation of municipal contracts may help it create a track record to eventually overcome that.